This report provides high-level overviews and strategic analyses of the developments in fixed broadband within Australia. It identifies business opportunities, points out the hype and the pitfalls, and it will be of assistance in making the right business decisions. The subjects covered in the report include:
The Market in 2007
Statistical overviews
Government plans and policies
Consumer and business market
Infrastructure, technologies and applications – overviews and statistics
Network operators and major wholesale operators
Revenue opportunities
1. DEVELOPMENTS AND ANALYSIS 2007
1.1 Regions can be commercially broadbanded
1.2 Bringing some sanity into the broadband debate
1.3 OECD vindicated re its broadband data
1.4 Where are the broadband devices?
1.5 Broadband: Australia is on the right track
1.6 Analyses of Labor’s broadband plan
1.7 Low demand density for broadband services
1.8 Can we stop the broadband train crash?
1.9 Telstra moving towards VDSL
1.10 Broadband Blueprint?
1.10.1 Implementation before blue printing
1.10.2 States discussed blueprint
2. STATISTICAL OVERVIEW AND FORECAST
2.1 Introduction
2.2 Australia’s broadband ranking – mid-2007
2.3 The broadband market in numbers – 2006
2.3.1 ACCC Report 2006
2.3.2 Subscriber statistics overview and forecasts
2.4 Market shares
2.5 Market statistics and forecasts – 2005 - 2015
2.5.1 Broadband statistics
2.5.2 Revenue forecasts – 2006 - 2007
2.5.3 Residential market – where the long term potential exists
2.5.4 Long-term forecast – 2015
2.5.5 Broadband speeds – towards 2015
2.5.6 Spectacular developments in bandwidth
2.5.7 Market segment forecasts – 2005 - 2015
3. BUSINESS MARKET
3.1 Market trends
3.1.1 Business market in 2007
3.1.2 The next step for broadbanded companies
3.2 Statistical overview
3.2.1 Broadband subscriber statistics
3.2.2 The business ISP market
3.2.3 Revenue statistics
3.3 Business market surveys
3.3.1 Australian SME Telecommunications Survey overview – 2007
3.3.2 Business use of information technology – ABS
3.3.3 ACCC claims corporate competition is vigorous
3.3.4 Survey reveals increase in Internet business
3.3.5 Optus survey finds huge growth in mobile email
4. MARKET SURVEYS
4.1 The Internet – the killer app
4.2 ABS survey of Internet and ISP activity – September 2006
4.2.1 Overview
4.2.2 Internet subscribers
4.2.3 Geographical data
4.2.4 Data downloaded
4.2.5 Internet access technologies
4.3 ABS Internet activity survey (large ISPs only) – 2006 - 2007
4.3.1 Internet subscribers
4.3.2 Geographical data
4.3.3 Data downloaded
4.3.4 Internet subscribers and ISPs by access technology
4.3.5 Internet subscribers and ISPs by subscriber type and download speed
4.4 ABS survey – household use of Internet information technology – 2006
4.4.1 Broadband Internet access
4.4.2 Use of computers by children
4.5 Other market surveys
4.5.1 Ericsson Consumer Lab survey
4.5.2 Online advertising market surges – late 2006
5. RESIDENTIAL MARKET
5.1 Household use of Internet information technology
5.1.1 Household statistics
5.1.2 Household home Internet and computer access
5.1.3 Type of household Internet connection
5.1.4 Use of the Internet
5.1.5 Main purpose of Internet use at home
5.1.6 Main reasons or not having Internet access
5.1.7 Frequency of Internet usage
5.2 Sensis consumer index – 2006
5.3 Other residential market surveys
5.3.1 The connected home
5.3.2 Parents see new technologies as having a negative impact on kids – April 2007
5.3.3 Online shopping low in Australia during Christmas 2006
5.3.4 Link between Television and the Internet
5.3.5 Dial-up Internet continues to decline at the expense of ADSL
5.3.6 Roy Morgan survey – residential broadband take-up throughout Australia
5.3.7 Broadband growth in Australia – Market Clarity
5.3.8 A Survey by Connection Research Services
5.3.9 Survey on Internet security
5.3.10 ASCCA researches seniors’ telecommunication needs (Internet)
5.3.11 Market survey by Ericsson (Internet)
5.3.12 Home Internet usage survey
5.3.13 Australian consumers embrace Internet banking
6. ADSL
6.1 Overview and statistics
6.1.1 ADSL subscriber statistics
6.1.2 Digital Subscriber Line (DSL) resellers
6.1.3 Customer Access Network (CAN) issues
6.1.4 Regional DSL
6.1.5 Telstra’s extended broadband trial – abandoned
6.2 ADSL2+ providers
6.2.1 DSLAMs and ADSL2+
6.2.2 Telstra
6.2.3 Optus
6.2.4 Internode
6.2.5 iiNet
6.2.6 Adam Internet
6.2.7 Netspace
6.2.8 PowerTel
6.2.9 Telarus
6.3 DSLAMs and ADSL2
6.3.1 ADSL (introduction only)
6.3.2 Unbundling of the Local Loop (ULL) and line sharing
6.3.3 DSLAM
6.3.4 ADSL2+
6.3.5 New business models
6.3.6 High speed Internet & High Definition TV to regional & rural areas
7. CABLE MODEMS
7.1 Latest developments
7.1.1 Telstra
7.1.2 Optus
7.1.3 Cable opportunities in SMEs
7.2 Market Overview
7.2.1 Background
7.2.2 High-speed Internet access
7.2.3 DOCSIS 3.0
7.3 From HFC to FttH – analysis
7.3.1 Introduction
7.3.2 HFC nearing the end of its economic life
7.3.3 Lack of competition stifles innovation
7.3.4 Consolidate the two networks and combine for competition
7.3.5 FttN
7.4 The long road that led to nowhere
7.4.1 Historical overview
7.4.2 Market statistics and forecasts
7.5 Telstra’s cable modem service
7.5.1 Overview
7.5.2 Technology standard overview
7.5.3 BigPond Cable Extreme
7.5.4 Historical Background
7.5.5 Trialling faster cable modem speeds
7.6 Optus
7.6.1 Overview
7.7 Cable modems versus xDSL
7.8 Cable telephony
7.8.1 Market overview
7.8.2 The end of cable telephony?
8. BROADBAND IS ESSENTIAL INFRASTRUCTURE
8.1 Brief introduction to key technologies
8.1.1 Digital Subscriber Line (DSL)
8.1.2 Cable modems
8.1.3 Fibre-to-the-Home (FttH)
8.1.4 Fibre-to-the-Node (FttN)
8.1.5 Wireless broadband
8.1.6 Broadband Powerlines (BPL)
8.1.7 Broadband Technologies capabilities
8.1.8 Technology reports
8.2 Broadband doesn’t equal high-speed Internet
8.3 The many aspects of broadband infrastructure
8.3.1 Broadband equals healthcare infrastructure
8.3.2 Broadband equals utility infrastructure
8.3.3 Broadband equals education infrastructure
8.3.4 Broadband equals media and e-business infrastructure
8.3.5 Broadband equals lifestyle infrastructure
8.3.6 Cities to take charge
8.3.7 National or local infrastructure
8.3.8 The pointless technology debates
9. NETWORK OPERATORS AND WHOLESALERS
9.1 ISP market
9.2 Internet media companies
9.3 The broadband industry
9.3.1 Industry structure
9.3.2 Too much reliance on access
9.4 DSL Operators
9.4.1 Telstra infrastructure
9.4.2 Telstra’s ADSL network
9.4.3 Optus
9.4.4 Nextep Broadband
9.4.5 PowerTel
9.4.6 Netspace
9.4.7 Commander
9.4.8 iiNet
9.4.9 Primus
9.4.10 Soul
9.4.11 AAPT
9.4.12 People Telecom
9.4.13 Internode
9.4.14 Amcom
9.4.15 Digital Distribution Australia
9.5 HFC Networks
9.5.1 Telstra BigPond broadband cable
9.5.2 OptusNet cable
9.5.3 Neighbourhood Cable
9.6 TransACT
9.7 AUSalliance
9.8 Wireless broadband operators
9.9 Electricity utilities
9.10 Consolidation
10. ANALYSES
10.1 What is broadband and why is it needed?
10.2 True broadband
10.3 We told you Telstra was bluffing
10.4 Boom and bust cycle in local access
10.4.1 Global infrastructure nearing collapse
10.4.2 Wild growth in local access
10.4.3 Dark fibre providers setting the scene
10.4.4 Expect the bust in 2012/13
10.4.5 Financial world getting on board
10.4.6 One minute to midnight
10.5 Broadband deteriorating in regional Australia
10.5.1 Australian farmers slow to use broadband – August 2006
10.6 Open networks needed for broadband services
10.7 Incumbents are running behind
10.7.1 Build and they will come?
10.7.2 Slow CAN upgrades from Telstra
10.7.3 Optus has been pursuing resale rather than infrastructure
10.7.4 How to destruct capital
10.7.5 Serious consequence for Australian economy
10.8 New initiatives
10.8.1 Long-haul
10.8.2 CAN alternatives
10.8.3 Telstra’s network initiatives
10.8.4 Regional infrastructure funds
10.9 Copper is still very much alive
10.10 Proactive communities
11. GLOSSARY OF ABBREVIATIONS
Exhibit 1 – Advice for information highway contenders
Exhibit 2 – From Kilobit to Yottabit
Exhibit 3 – Some application bit rates
Exhibit 4 – Drivers of high-speed Internet
Exhibit 5 – Service Providers Activities
Exhibit 6 – Early ADSL2+ providers – 2006
Exhibit 7 – HFC Network status
Exhibit 8 – Devices supported by types of broadband
Exhibit 9 – Optus HFC Network status
Exhibit 10 – Some application bit rates
Exhibit 11 – Access technologies
Exhibit 12 – What does it mean? (DSL, 1Gb/s, DWDM transmission speeds)
Exhibit 13 – Overview of physical distribution networks for high-speed services
Exhibit 14 – Infrastructure – people power
Table 1 – Number of Australian households and technology penetration – 2007
Table 2 – Broadband component of Internet households – 2005 - 2010; 2015
Table 3 – Broadband access among Internet households – selected countries –2001 - 2007
Table 4 - Broadband subscribers by technology - 2001 - 2006
Table 5 – Broadband subscribers – total market – retail values – 2002 - 2008
Table 6 – Broadband subscribers – total market – wholesale values – 2002 - 2008
Table 7 – Broadband subscribers – total market – annual growth – retail values – 2003 - 2008
Table 8 – Broadband subscribers – total market – annual growth – wholesale values – 2003 - 2008
Table 9 – Broadband subscribers – market shares – retail values – 2003 - 2008
Table 10 – Broadband subscribers – market shares – wholesale values – 2003 - 2008
Table 11 – Broadband subscribers – market shares (cable, ADSL totals) – retail values – 2003 - 2008
Table 12 – Broadband subscribers – total market – retail values – 2002 - 2008
Table 13 – Total broadband subscribers – 1996 - 2009
Table 14 – Broadband revenues by major provider – 2000 - 2007
Table 15 – Broadband revenues by major provider – annual change – 2003 - 2007
Table 16 – Broadband revenue market share by major provider – 2003 - 2007
Table 17 – Revenue make-up scenario forecasting – 2010
Table 18 – Residential spend per household per annum – 2003; 2010; 2015
Table 19 – Overview total Telecoms/Internet market – 2015
Table 20 – Residential Broadband (BB) growth predictions – next ten years
Table 21 – Number of countries with broadband speeds of more than 256Kb/s – 2002 - 2006
Table 22 – Average maximum broadband speeds – international benchmark
Table 23 – Why the average home will soon require 50Mb/s to the home
Table 24 – Broadband revenues – 2005; 2010; 2015
Table 25 – Broadband market share by technology – 2005; 2010; 2015
Table 26 – Dial-up and broadband subscriber overview – mid-2006
Table 27 – Business broadband subscribers – 2002 - 2008; 2010
Table 28 – Business broadband ARPU & annual change – 2004 - 2006
Table 29 – Business market Internet revenue – 1997 - 2007
Table 30 – Percentage of business usage of technology – 1994; 1998; 2000 - 2005
Table 31 – Percentage computer and Internet use by employment size – 2003 - 2005
Table 32 – Percentage computer and Internet use by total income – 2003 - 2005
Table 33 – Percentage computer and Internet use by industry– 2003 - 2005
Table 34 – Percentage computer and Internet use by state – 2003 - 2005
Table 35 – Percentage computer and Internet use by total region – 2003 - 2005
Table 36 – Percentage purchasing over the Internet – 2001 - 2005
Table 37 – Main type of Internet connection – 2004 - 2005
Table 38 – Main type of broadband connection – 2004 - 2005
Table 39 – Barriers to broadband usage – 2004 - 2005
Table 40 – Proportion of businesses using broadband by country – 2005
Table 41 – DSL, 1Gb/s, DWDM transmission speeds – what does it mean?
Table 42 – Internet households & business subscribers – 1985; 1990; 1995 - 2006
Table 43 – Dial-up and non-dial-up Internet subscribers – 2003 - 2006
Table 44 – Business, government and household Internet subscribers – 2005 - 2006
Table 45 – Proportion of business, government and household Internet subscribers – 2005 - 2006
Table 46 – Internet subscribers by type by ISP size – 2005 - 2006
Table 47 – Proportion of Internet subscribers by type by ISP size – 2005 - 2006
Table 48 – Internet subscribers by type and download speeds – September 2006
Table 49 – Internet subscribers per state – 2002 - 2006
Table 50 – Portion of Internet subscribers per state – 2002 - 2006
Table 51 – Data downloaded by households, business and government – 2000 - 2006
Table 52 – Data downloaded by dial-up and non-dial up users – 2003 - 2006
Table 53 – Internet subscribers by access technology – September 2006
Table 54 – Internet subscribers by access technology – March 2005
Table 55 – Dial-up Internet subscribers – business, government and households – March 2004 – March 2007
Table 56 – Non-dial-up Internet subscribers – business, government and households – March 2004 - March 2007
Table 57 – Total Internet subscribers – business, government and households – September 2006 - March 2007
Table 58 – Total dial-up & non-dial-up Internet subscribers – March 2004 - June 2006
Table 59 – Internet subscribers per state – June 2006 - March 2007
Table 60 – Dial-up data downloaded by households, business & government – 2004 - 2007
Table 61 – Non dial-up data downloaded by households, business & government – 2004 - 2007
Table 62 – Total data downloaded by dial-up and non dial-up – 2004 - 2007
Table 63 – Numbers of ISPs by size – September 2006 - March 2007
Table 64 – Internet subscribers by access technology – September 2006 - Mar 2007
Table 65 – Internet subscribers and ISPs by access technology – June 2006
Table 66 – Internet subscribers and ISPs by access technology – June 2006
Table 67 – Business/government Internet subscribers by download speed – Sep 2006 - Mar 2007
Table 68 – Household Internet subscribers by download speed – Sep 2006 - Mar 2007
Table 69 – All Internet subscribers by download speed – Sep 2006 - Mar 2007
Table 70 – ISPs & business/government Internet subscribers by download speed – June 2006
Table 71 – ISPs and household Internet subscribers by download speed – June 2006
Table 72 – All Internet subscribers & ISPs by download speed – June 2006
Table 73 – Household Internet connection by type of access – 2005 - 2006
Table 74 – Personal use of the Internet by type of access – 2005 - 2006
Table 75 – Household Internet access by type of broadband access – 2005 - 2006
Table 76 – Children’s use of computers by site – 2005 - 2006
Table 77 – Children’s use of a computer at home by activities – 2005 - 2006
Table 78 – Children’s use of a computer at home by frequency – 2005 - 2006
Table 79 – Children’s use of the Internet by site – 2005 - 2006
Table 80 – Children’s use of the Internet at home by activities – 2005 - 2006
Table 81 – Children’s use of the Internet at home by type of Internet sites accessed – 2005 - 2006
Table 82 – Children’s use of the Internet at home by frequency – 2005 - 2006
Table 83 – Children’s use of the Internet by type of Internet access – 2005 - 2006
Table 84 – Number of Australian households and technology penetration – 2007
Table 85 – Broadband component of Internet households – 2005 - 2010; 2015
Table 86 – Total households with access to a home computer – 1998 - 2006
Table 87 – Households with access to a home computer – 1998 - 2006
Table 88 – Households with access to a home computer by region – 1998 - 2006
Table 89 – Total households with home Internet access – 1998 - 2006
Table 90 – Households with home Internet access – 1998 - 2006
Table 91 – Households with home Internet access by region – 1998 - 2006
Table 92 – Percentage use of the Internet according to location – 2005 - 2006
Table 93 – Percentage use of the Internet at home by purpose – 2005 - 2006
Table 94 – Percentage use of the Internet at home by main purpose – 2005 - 2006
Table 95 – Main reasons for not having access to the Internet at home – 2005 - 2006
Table 96 – Frequency of use of the Internet at home by gender and region – 2005 - 2006
Table 97 – Computerisation in the home – May 2006
Table 98 – Internet usage in the last 12 months – May 2006
Table 99 – Internet applications used in the last 12 months – May 2006
Table 100 – Banking channel preferred by CBA survey respondents – 2006
Table 101 – Broadband DSL retail subscribers – 2002 - 2006
Table 102 – Current and planned competitive DSLAM roll outs*
Table 103 – Internet service providers with DSLAM infrastructure – 2006 - 2007
Table 104 – Number of ADSL and ADSL2+ enabled exchanges – June 2006
Table 105 – Number of infrastructure providers by number of ADSL-enable exchanges – June 2006
Table 106 – ADSL2+ subscribers by provider – 2006 - 2007
Table 107 – Cable broadband subscribers per operator and annual change – 2001 - 2007
Despite the ‘Mexican Standoff’ between the government and Telstra on the issue of a regulatory holiday for new broadband infrastructure, broadband penetration is proceeding at high speed in Australia. By mid-2007 there were close to 4.5 million subscribers. In the residential market this means a broadband penetration of close to 64% in Internet households (46% of total households). In the business market this figure is over 80%.
For more information, see chapter 5.1.1, page 49.
While the penetration of broadband in Australia is catching up with its trading partners it is still lagging behind in the quality of broadband provided by the operators, and in the price customers have to pay. The majority of customers are still on services that provide only 256Kb/s or 512Kb/s. Telstra, however, does make an 8Mb/s available, but this is not a guaranteed speed, only a best-effort service. For more information, see chapter 1, page 1.
Telstra’s competitors are leading the market in the higher speed ADSL2+ services market. The regulator has finally been able to force better unbundled local loop and spectrum-sharing wholesale services into the market, and affordable true-broadband services are now available. Telstra is only making ADSL2+ available in those exchanges where its competitors have installed their own DSLAMs, so it is being a follower rather than a leader in new and innovative broadband services, a fact that is hampering a more rapid deployment of this superior infrastructure.
For more information, see chapter 6.2, page 66.
Back in 2005 Telstra announced an FttN infrastructure upgrade, but it requested a regulatory holiday – preventing others from utilising the network on a basis equivalent to Telstra Retail. This was not sanctioned and Telstra has subsequently threatened not to roll out FttN. However, the reality is that the company can’t afford not to move into this market. An Optus-led consortium, G9, has proposed an alternative FttN plan, with consumer access prices significantly lower than the prices that, according to rumours, the incumbent would like to charge.
Broadband infrastructure is essential for the social and economic development of the country and both the current Government and the Opposition have broadband policies in place, aimed at ensuring that regional and other fringe areas will receive services that are equivalent to those available in the more economically viable metropolitan areas of the country.
For more information, see chapter 8, page 93.
However, before any further plans are developed the government will have to establish the right regulatory environment. It would be foolish to allow for the overbuilding of infrastructure; a far better option would be to ensure the sharing of infrastructure.
For this to happen the government will need to act upon its operational separation legislation, which was passed in Parliament back in 2005. Only when this is sorted out can responsible investment decisions be made and responsible government funding be put in place. As we have seen in other countries, this will enable more companies to enter the facilities-based market (even in regional markets) in addition to entering the services market.
Key Highlights
There are now close to 4.5 million broadband users in Australia, growing to 6 million over the next 2 years.
More than 75% are still on low-speed broadband (under 1Mb/s).
Broadband prices for high-speed broadband are higher than in comparable countries.
Most business are now connected via broadband.
Progress is slow in ADSL2+ (24Mb/s speeds) as Telstra is not an active player in this market.
Independent service providers have installed over 2,500 DSLAMs.
Telstra has launched a cable modem upgrade, offering higher speeds over this network.
Broadband is essential infrastructure for e-health, education and smart energy meter deployments.
These sectors can each save costs between 10% and 20% by deploying their services over true-broadband infrastructure.
Infrastructure upgrades will be evolutionary rather than revolutionary. From ADSL to ADSL2+ to VDSL to FttN, and eventually FttH. This process takes 7 to 15 years.
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This report provides high-level overviews and strategic analyses of the developments in fixed broadband. It identifies business opportunities, points out the hype and the pitfalls, and it will be of assistance in making the right business decisions. Further information provided includes:
Statistical overviews on subscribers, revenues, market shares, international rankings.
Competitive information on the market, the industry and the players.
How the market should operate in order to increase investments, maximize the value of the infrastructure and open up new revenue streams.
Insight into the market and the industry: ADSL, ADSL2+, DSLAMs, cable modems.
Unraveling of the infrastructure debate and an indication of what is really needed, and when.
Analyses of the Government and Opposition plans and policies – the government’s role needs to change significantly, especially in relation to the provision of regional infrastructure.
Market surveys and statistical overview of the business and residential markets – assisting customers to make their own assessments for their own organizations.
Overview of the real innovators in this market and what are they offering.
Data in this report is the latest available at the time of preparation and may not be for the current year.